The Maximum Social Security Family Benefit
Certain family members may be able to receive additional payments based on your work record. For example, a spouse qualifies for spousal payments worth up to 50% of the higher earner’s benefit at full retirement age, if that is worth more than the payment based on his or her own work record. So, if one spouse has a Social Security payment of $3,345 per month at full retirement age, the other spouse might qualify for a spousal payment of up to $1,672.50 monthly. And after you pass away, your spouse could receive a survivor’s payment of the full $3,345 per month, which would also be adjusted annually for inflation.
Children who are under age 19 or disabled may also qualify for benefits based on your work record. The maximum family benefit all your family members can receive is usually about 150% to 180% of your full retirement benefit. A divorced spouse can additionally claim benefits based on your work record, but it will not impact the amount you and your current family members receive.
Copyright 2022 U.S. News & World Report
Effect Of Delaying Retirement Benefits
1Represents Full Retirement Age based on DOB January 2, 1960
2PIA = The primary insurance amount is the basis for benefits that are paid to an individual
That higher baseline would last for the rest of your retirement and serve as the basis for future increases linked to inflation. While it’s important to consider your personal circumstancesâit’s not always possible to wait, particularly if you are in poor health or can’t afford to delayâthe benefits of waiting can be significant.
Be aware that if you decide to wait past age 65, you may still need to sign up for Medicare. In some circumstances your Medicare coverage may be delayed and cost more if you don’t sign up at age 65. If you start Social Security benefits early, you’ll automatically be enrolled into Medicare Parts A and B when you turn age 65.
Your annual Social Security statement will list your projected benefits between age 62 to 70, assuming you continue to work and earn about the same amount through those ages. If you need a copy of your annual statement, you can request one or view it online on the Social Security Administration portal.
How To Maximize Benefits
To get the maximum benefit, you need to take three main steps.
Firstly, youll want to make sure that youve worked for at least 35 years.
If not, zeros will be averaged into your calculation for each year youre missing income under that threshold.
You must also earn the maximum wage taxable or more for at least 35 years.
The maximum wage taxable is $147,000 in 2022, but it changes each year as salaries increase.
Once your earnings exceed that wage cap, you dont get taxed on it for Social Security.
The third but perhaps easiest way to boost your benefits is to delay your claim.
You can start claiming at age 62, but this would result in a permanent 30% reduction of your benefits.
If your full retirement age is 66, youll get 100% of your monthly benefit if you start claiming then.
Or if you delay benefits for an additional 12 months, youll receive 108% while youll get 132% of the monthly benefit if you wait until 70.
You cant earn delayed retirement credits beyond age 70, so theres no point to delay your claim further than this.
You can also use the Maximize My Social Security tool by professor and economist Laurence J. Kotlikoff to help you boost your benefit amount as well.
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Why Not Claim Early Rather Than Draw Down An Ira And Other Savings
Its conventional wisdom to delay tapping an individual retirement account, instead enabling it to grow tax deferred. Roughly 40 percent of beneficiaries claim reduced Social Security benefits at 62 or 63.
But many researchers say reversing the order living on retirement savings in the early years and holding off on collecting benefits is likely to increase monthly income over a lifetime.
Rules For Retirement And Survivor Benefits
The family maximum formula for Old-Age and Survivors Insurance benefits is based on a beneficiary’s primary insurance amount . The PIA is a beneficiary’s basic Social Security benefit amount before adjustments for retirement age, earnings, and other factors.1 For a worker who reaches age 62 or dies in 2015 , SSA calculates the family maximum using the following formula:
150 percent of the first $1,056 of the worker’s PIAplus
272 percent of the worker’s PIA over $1,056 through $1,524 plus
134 percent of the worker’s PIA over $1,524 through $1,987 plus
175 percent of the worker’s PIA over $1,987.
Ultimately, this formula yields a maximum for each family that is between 150 percent and 188 percent of the worker’s basic Social Security benefit, or PIA.2 The final amount is rounded to the next lowest ten cents. The dollar amounts in the family maximum formula increase each year according to average wage growth.3
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Fact #: Social Security Lifts Millions Of Older Adults Above The Poverty Line
Without Social Security benefits, about 4 in 10 adults aged 65 and older would have incomes below the poverty line, all else being equal, according to official estimates based on the 2021 Current Population Survey. Social Security benefits lift more than 16 million older adults above the poverty line, these estimates show.
An important study on retirement income from the U.S. Census Bureau that matches Census estimates to administrative data suggests that the official estimates overstate older people’s reliance on Social Security. The study finds that in 2012, 3 in 10 older adults would have been poor without Social Security, and that the program lifted more than 10 million older adults above the poverty line.
No matter how it is measured, its clear that Social Security lifts millions of older adults above the poverty line and dramatically reduces their poverty rate.
Is Social Security Based On The Last 5 Years Of Work
Social Security benefits are based on your lifetime earnings. Your actual earnings are adjusted or indexed to account for changes in average wages since the year the earnings were received. Then Social Security calculates your average indexed monthly earnings during the 35 years in which you earned the most.
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How To Boost Your Social Security By $10000 Per Year
The average benefit amount as of August 2022 is around $1,673 per month, according to the Social Security Administration.
Say, for example, you have an FRA of 67 years old, and by filing at that age, youd receive $1,673 per month. If you began claiming at age 62 instead, your benefit amount would be permanently reduced by 30%, leaving you with around $1,171 per month or $14,052 per year.
On the other hand, if you delay benefits until age 70, youd receive your full benefit amount plus an extra 24%. That amounts to around $2,075 per month, or $24,900 per year. In total, thats $904 per month more than youd receive by filing at age 62.
|Age You Begin Claiming
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The attorneys at Berger and Green have more than 40 years of experience handling all aspects of disability claims. We work hard to get our clients the benefits that they deserve. If you want to file a disability claim or the SSA denied your initial application, we can help.
If your disability was the result of someone elses careless or reckless actions, you mighthave a valid personal injury case. Our attorneys might be able to help you recover damages in addition to your Social Security benefits. Contact us today at for a free consultation.
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Analysis Of Family Maximum Rules
Because of the more restrictive DI family maximum rules, benefits payable to disability beneficiary families are significantly lower than those for retirement and survivor beneficiary families, particularly at the lower end of the earnings scale. In 2015, newly eligible disabled beneficiaries with AIMEs of $903 or less can have no auxiliary beneficiaries because the DI family maximum for such workers is 100 percent of their PIA. Newly eligible disabled beneficiaries with AIMEs between $904 and $1,942 have their family benefits reduced, even if they have only one auxiliary, because the family maximum caps their benefits at 85 percent of their AIME .
Chart 1 shows OASI and DI family maximum amounts as well as the PIA formula as percentages of AIME and at each level of AIMEa measure of lifetime earnings. At all earnings levels, the OASI family maximum is more generous than the DI family maximum, replacing a greater proportion of earnings. At the low end of the earnings scale , the DI family maximum is equal to the worker’s PIA, which means that no benefits will be paid to disabled-worker family members. The DI family maximum is notably less progressive than the OASI family maximum , as shown by the slope of each line in Chart 1. The DI family maximum line slopes downward in a relatively straight line, while the OASI family maximum is kinked at the low end because it allows significantly more generous benefits for the families of lower earners.
Consistently Earn A High Salary
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You will need to maintain a high income throughout your career to qualify for large Social Security payments in retirement. In recent years, you need to earn a six-figure salary to get a top Social Security payment.
The maximum wage taxable by Social Security is $147,000 in 2022. However, the exact amount changes each year and has increased over time. It was $137,700 in 2020 and $106,800 in 2010. Back in 2000, the taxable maximum was just $76,200. Only $39,600 was taxed by Social Security in 1985.
Workers pay 6.2% of their earnings into the Social Security system, and employers match this amount until their salary exceeds the taxable maximum amount of income for that year. Those who have salaries larger than the taxable maximum do not pay Social Security taxes on that income or have those earnings factored into their future Social Security payments.
“In order to receive the maximum Social Security benefit, you would need to earn at least the maximum Social Security wage base for at least 35 years in your career,” says Jim Blankenship, a certified financial planner for Blankenship Financial Planning in New Berlin, Illinois, and author of “A Social Security Owner’s Manual.” “The figure is adjusted each year based on changes to the national average wage index.”
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How To Start Saving For Retirement
While it may seem daunting to start saving hundreds of dollars every month, you can start small and increase your savings rate over time. Experts generally recommend saving between 10% and 20% of your annual income, but if you have credit card debt or other high interest debt, you generally should prioritize paying that off before you start investing.
If your employer matches your 401 contributions, you’ll want to focus on maximizing the match. By doing so, you’re earning free money. A 401 is considered a pre-tax retirement account. With a 401, money is automatically deducted from your paycheck, and you won’t pay taxes on that income until you withdraw it in retirement
After you’ve maximized your employer’s 401 match, you might consider opening an individual retirement account . The traditional and Roth IRA are the two most common types of IRAs. For IRAs, the contribution limit is $6,000, but individuals over the age of 50 can make catch-up contributions for a max limit of $7,000.
Like a 401, a traditional IRA is a pre-tax retirement account where individuals don’t pay taxes on their investments until they withdraw them in retirement. An traditional IRA has no income limits, so it’s available to everyone regardless of how much money you make.
Benefits For Your Spouse Or Common
If you are eligible to receive the Guaranteed Income Supplement, your spouse or common-law partner may be able to receive the Allowance if your spouse or common-law partner:
- is 60 to 64 years of age
- is a Canadian citizen or a legal resident
- resides in Canada and has resided in Canada for at least 10 years since the age of 18
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What If Your Salary Is Below $147000
If your salary is below $147,000 in 2022 or below $160,200 in 2023, you could potentially still earn the maximum Social Security benefit. But to do so, you would need to make sure that 2022 doesnt count in your benefits calculation. You would need a total of 35 other years of work, during which you earn the maximum countable income.
Most people are not going to be able to pull that off, so dont count on maxing out your Social Security benefit. Instead, you should realize your own Social Security is going to equal about 40% of your preretirement wages. So you can estimate what your benefit is likely to be and start planning to save enough to supplement that income so you can have a comfortable life as a retiree.
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What Does Ittake To Get The Maximum Social Security Benefit
How does someone get the maximum Social Security benefit?The simple answer is from 35 years of real earnings at or above the maximum taxable earnings for Social Security.
Once you hit $147,000 in income , you pay Social Security taxes on that amount but not on any income above that. The Social Security Administration only considered wages up to that $147,000 mark for their maximum because you quit paying into the system on any dollars above that point that you earn.
You can expect the maximum taxable earnings number toincrease, usually annually. The Social Security Administration makes thesechanges to stay in step with the national average wage index.
For example, in 1984, the maximum wage considered for SocialSecurity taxation was only $37,800. Inflation and wage growth drives thatnumber higher most years.
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Theres A Social Security Spousal Benefit
Marriage is rewarded when it comes to Social Security. One spouse can take whats called a spousal benefit, worth up to 50% of the other spouses Social Security benefit. For example, if your monthly Social Security benefit is worth $2,000 but your spouses own benefit is only worth $500, your spouse can collect a spousal benefit worth $1,000 bringing in $500 more in income per month.
Just as the benefit based on your own work history is reduced if you claim it early, the same is true for a spousal benefit. That 50% figure is the maximum amount that only a spouse who is at least full retirement age is eligible for. Taking the spousal benefit early at, say, age 62, reduces the amount to as little as 32.5% of the higher earners benefit. If you take your own benefit early and then later switch to a spousal benefit, your spousal benefit will still be reduced.
Watch For These 5 Changes To Social Security In 2023
More than 70 million people depend on one of Social Securitys benefit programs, so annual changes to the program and its payouts are always highly anticipated. But substantially higher benefit checks have been a rarity in recent years. With inflation soaring in 2022, the extra money will help seniors and others make ends meet.
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What Is The Maximum Possible Social Security Benefit
The average monthly Social Security payment for retirees was $1,564 in November 2021. But many retirees receive over $3,000 per month from the Social Security Administration, and payments could be as much as $4,194 in 2022.
The maximum possible Social Security benefit in 2022 depends on the age you begin to collect payments and is:
- $2,364 at age 62.
- $3,345 at age 66 and 4 months.
- $4,194 at age 70.
However, qualifying for payments worth $3,000 or more requires some serious career planning throughout your life. Here’s what you need to do to qualify for the maximum possible Social Security payment.
When Do You Plan To Claim Benefits
Finally, you’ll need to wait until the age of 70 to start getting your Social Security benefits if you hope earn the highest possible check. That’s because the $3,895 max benefit is available only to people who earn the maximum number of delayed retirement credits.
Delayed retirement credits become available after you reach full retirement age. You earn them for each month after FRA until age 70 and they raise your benefit by two-thirds of 1% per month. If you claim checks before 70, you won’t earn the full benefits boost available and will end up falling short of the $3,895 maximum.
Delaying a benefits claim until 70 is challenging for many retirees, as is earning at least the wage base limit for 35 years. Don’t worry if you end up falling short of earning the maximum Social Security check. Instead, focus on saving money so you have plenty of income to supplement the retirement benefits you do end up with.
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